Future Equity Agreement Template for Indonesia

The Future Equity Agreement serves as a crucial instrument in Indonesia's growing startup ecosystem, providing a streamlined way for early-stage companies to raise capital without immediately setting a valuation. This document type emerged as a simplified alternative to convertible notes, particularly suitable for seed-stage investments in Indonesian companies. The agreement must comply with Indonesian corporate law (Law No. 40 of 2007), investment regulations, and OJK requirements, while incorporating international best practices. It typically includes detailed provisions for conversion mechanisms, valuation caps, discount rates, and investor rights, structured to accommodate both domestic and foreign investment considerations. The document is particularly valuable in situations where determining a company's present valuation is challenging or when parties prefer to defer valuation discussions to a future funding round.

1. Parties: Identification of the investor and the company, including their full legal names, registration numbers, and addresses

2. Background: Context of the agreement, including the company's business nature and the investor's interest in future equity investment

3. Definitions: Key terms used throughout the agreement, including but not limited to Qualifying Financing, Equity Financing, Conversion Price, and Valuation Cap

4. Investment Amount: Specification of the investment amount and payment terms

5. Conversion Rights: Details of when and how the investment converts into equity, including automatic and optional conversion provisions

6. Company Representations: Company's warranties regarding its legal status, authority to enter agreement, and business condition

7. Investor Representations: Investor's warranties regarding investment capacity and understanding of risks

8. Information Rights: Investor's rights to receive financial and other company information

9. Assignment and Transfer: Rules regarding transfer of rights under the agreement

10. Termination: Circumstances under which the agreement can be terminated

11. Governing Law and Dispute Resolution: Specification of Indonesian law as governing law and dispute resolution mechanisms

12. General Provisions: Standard provisions including notices, amendments, and entire agreement clause